Indigo Reports Fiscal 2021 Third Quarter Financial Results - Exceptional holiday sales momentum dampened by government-mandated retail closures and capacity restrictions

Ad blocking detected

Thank you for visiting CanadianInsider.com. We have detected you cannot see ads being served on our site due to blocking. Unfortunately, due to the high cost of data, we cannot serve the requested page without the accompanied ads.

If you have installed ad-blocking software, please disable it (sometimes a complete uninstall is necessary). Private browsing Firefox users should be able to disable tracking protection while visiting our website. Visit Mozilla support for more information. If you do not believe you have any ad-blocking software on your browser, you may want to try another browser, computer or internet service provider. Alternatively, you may consider the following if you want an ad-free experience.

Canadian Insider Ultra Club
$500/ year*
Daily Morning INK newsletter
+3 months archive
Canadian Market INK weekly newsletter
+3 months archive
30 publication downloads per month from the PDF store
Top 20 Gold, Top 30 Energy, Top 40 Stock downloads from the PDF store
All benefits of basic registration
No 3rd party display ads
JOIN THE CLUB

* Price is subject to applicable taxes.

Paid subscriptions and memberships are auto-renewing unless cancelled (easily done via the Account Settings Membership Status page after logging in). Once cancelled, a subscription or membership will terminate at the end of the current term.

Indigo Reports Fiscal 2021 Third Quarter Financial Results - Exceptional holiday sales momentum dampened by government-mandated retail closures and capacity restrictions

Canada NewsWire

TORONTO, Feb. 4, 2021 /CNW/ - Indigo Books & Music Inc. (TSX: IDG), Canada's largest book and lifestyle retailer, reported third quarter financial results.

Double-digit revenue growth in the first seven weeks of the quarter provided some cushion but could not overcome the severe impact of new government-mandated closures in several provinces, as well as severe customer capacity restrictions in markets with open stores.  As a result, revenue for the third quarter ended December 26, 2020, initially headed to show real growth, came in at $365.4 million compared to revenue of $383.7 million in the same period last year, a decrease of $18.3 million or 5 percent.  

Revenues were challenged by a significant wave of mandated COVID-19 store closures in Manitoba, Ontario and Quebec during the second part of November and December, a critical period of sales. The Company achieved exceptional e-commerce revenue growth of 92%, and the success of the Company's enhanced omnichannel capabilities, including click-and-collect, curbside pickup and Instacart, did blunt some of the effects of mandated re-closures. Bright spots in the quarter also included double-digit growth in the Company's baby and wellness categories and continued strength in its proprietary lifestyle brand OUI, showcasing customers' affinity for both core categories and new product assortment.

Commenting on the results, CEO Heather Reisman said: "These results are a testament to the demonstrated resilience of our teams and a deep affinity for our brand, achieved against massive disruption from mandated shut-downs and store limitations during the most important six weeks of our year. These shutdowns created a particularly uneven playing field in Ontario with 'essential' retailers selling all non-essential items, a practice disallowed by other provinces. Nevertheless, we remain energized by the momentum we saw pre-closures and look forward to having COVID-19 behind us."

Adjusted EBITDA for the period was $37.8 million for the 13-week period ended December 26, 2020, compared to $43.3 million for the same period last year. In the quarter, the Company recognized $9.7 million in occupancy expense abatement to share the financial burden of COVID-19 and $3.2 million in government support from the Canada Emergency Wage Subsidy.

Indigo reported net earnings of $30.7 million ($1.11 net earnings per basic common share) for the third quarter ended December 26, 2020, compared to net earnings of $25.8 million ($0.94 net earnings per basic common share) last year. This improvement was a result of income taxes and the application of previously unrecognized income tax losses.

With no outstanding debt and a cash balance of $229.4 million, the Company continues to be well positioned to manage through these uncertain times.

Analyst/Investor Call 
Indigo will host a conference call for analysts and investors to review these results at 9:00 a.m. (Eastern Time) tomorrow, February 5th, 2021. The call can be accessed by dialing 647-427-7450 from within the Toronto area, or 1-888-231-8191 outside of Toronto. The seven-digit participant code is 6671095.           

A playback of the call will also be available by telephone until 11:59 p.m. (ET) on February 12, 2021. The call playback can be accessed after 12:00 p.m. (ET) on February 6, by dialing 416-849-0833 from within the Toronto area, or 1-855-859-2056outside of Toronto. The seven-digit replay passcode number is 6671095. The conference call transcript will be archived in the Investor Relations section of the Indigo website, www.indigo.ca

Forward-Looking Statements 
Statements contained in this news release that are not historical facts are "forward-looking information" within the meaning of applicable Canadian securities legislation. To the extent any forward-looking information constitutes "financial outlooks" within the meaning of applicable Canadian securities laws, such information is being provided as preliminary financial and operational results. Financial outlooks, as with forward-looking information generally, are, without limitation, based on the assumptions and subject to various risks and uncertainties that could cause actual results to differ materially from those expressed in or implied in this news release. Among the key factors that could cause such differences are: general economic, market or business conditions; the future impacts and government response to the COVID-19 pandemic, including any impact to online and/or retail operations of the Company; competitive actions by other companies; changes in laws or regulations; and other factors, many of which are beyond the control of the Company, as set out in the Company's annual information form dated June 23, 2020 and available on the Company's issuer profile on SEDAR at www.sedar.com.

Undue reliance should not be placed on such forward-looking information and no assurance can be given that such events will occur in the disclosed time frames or at all. Any forward-looking information included in this news release is made as of the date of this news release and the Company does not undertake an obligation to publicly update such forward-looking information to reflect new information, subsequent events or otherwise unless required by applicable securities laws.

Non-IFRS Financial Measures 
The Company prepares its consolidated financial statements in accordance with International Financial Reporting Standards ("IFRS"). In order to provide additional insight into the business, the Company has also provided non-IFRS data, specifically adjusted EBITDA, in this press release. These measures do not have standardized meanings prescribed by IFRS and are therefore specific to Indigo and may not be comparable to similar measures presented by other companies. 

For additional context see "Results of Operations" and "Non-IFRS Financial Measures" in the Management's Discussion and Analysis (which can be found at www.indigo.ca/investor-relations or www.sedar.com).

AboutIndigo Books& Music Inc. 
Indigo is a publicly traded Canadian company listed on the Toronto Stock Exchange (IDG). Indigo is the world's first Cultural Department Store – a physical and digital meeting place inspired by and filled with books, music, art, ideas, and beautifully designed lifestyle products. Indigo believes in real books, in living life fully and generously, in being kind to each other and that stories – big and little – connect us.

Indigo founded the Indigo Love of Reading Foundation in 2004 to address the underfunding of public elementary school libraries. Every year the Foundation provides grants to high-needs elementary schools so they can transform their libraries with the purchase of new books and educational resources. To date, the Foundation has committed over $32 million to more than 3,000 elementary schools, benefitting more than 1,000,000 students. Most recently in April 2020, in the wake of the COVID-19 pandemic and unprecedented nation-wide school closures, the Foundation committed $1.0 million to provide books to families in need. To learn more about Indigo, please visit the "Our Company" section at indigo.ca.

Consolidated Balance Sheets

(Unaudited)










 As at 

 As at 

 As at 


December 26, 

December 28, 

March 28, 

(thousands of Canadian dollars)

2020

2019

2020





ASSETS




Current




Cash and cash equivalents

229,424

216,198

120,473

Short-term investments

-

7,750

-

Accounts receivable

26,395

19,755

7,640

Inventories

218,163

247,261

241,812

Prepaid expenses

7,937

6,604

6,062

Income taxes receivable

138

138

138

Derivative assets

-

19

3,794

Other assets

3,202

4,185

2,320

Total current assets

485,259

501,910

382,239

Loan receivable

446

926

446

Property, plant, and equipment, net

80,982

110,455

91,215

Right-of-use assets, net

366,104

430,994

382,146

Intangible assets, net

21,475

29,351

24,571

Equity investment, net

2,350

2,611

2,353

Deferred tax assets

-

89,782

-

Total assets

956,616

1,166,029

882,970

LIABILITIES AND EQUITY




Current




Accounts payable and accrued liabilities

249,992

261,281

164,294

Unredeemed gift card liability

68,626

65,676

51,673

Provisions

2,185

180

2,034

Deferred revenue

16,880

10,234

10,682

Short-term lease liabilities

63,022

65,454

68,402

Derivative liabilities

1,716

803

-

Total current liabilities

402,421

403,628

297,085

Long-term accrued liabilities

1,371

1,476

1,196

Long-term provisions

696

45

469

Long-term lease liabilities

491,378

509,708

500,215

Total liabilities

895,866

914,857

798,965

Equity




Share capital

226,986

226,986

226,986

Contributed surplus

14,075

12,463

12,822

Retained earnings (deficit)

(177,202)

12,522

(158,801)

Accumulated other comprehensive income (loss)

(3,109)

(799)

2,998

Total equity

60,750

251,172

84,005

Total liabilities and equity

956,616

1,166,029

882,970

 






Consolidated Statements of Earnings (Loss) and Comprehensive Earnings (Loss)

(Unaudited)












13-week

13-week

39-week

39-week


period ended

period ended

period ended

period ended


December 26,

December 28,

December 26,

December 28,

(thousands of Canadian dollars, except per share data)

2020

2019

2020

2019






Revenue 

365,426

383,737

705,786

779,657

Cost of sales 

(217,940)

(216,872)

(440,773)

(444,119)

Gross profit

147,486

166,865

265,013

335,538

Operating, selling, and other expenses

(110,843)

(124,641)

(264,948)

(334,233)

Operating profit

36,643

42,224

65

1,305

Net interest expense

(5,921)

(5,964)

(18,466)

(17,234)

Share of loss from equity investments

-

-

-

(1,588)

Earnings (loss) before income taxes

30,722

36,260

(18,401)

(17,517)

Income tax recovery (expense)

-

(10,411)

-

3,842

Net earnings (loss) 

30,722

25,849

(18,401)

(13,675)






Other comprehensive loss





Items that are or may be reclassified subsequently to net earnings (loss):





Net change in fair value of cash flow hedges
   [net of taxes of 0 and 0; 2019 - 190 and 283]

(3,151)

(520)

(4,654)

(771)

Reclassification of net realized (gain) loss
   [net of taxes of 0 and 0; 2019 - 0 and 215]

(861)

2

(856)

(586)

Foreign currency translation adjustment [net of taxes of 0 and 0; 2019 - 0 and 0]

(597)

-

(597)

-

Other comprehensive loss

(4,609)

(518)

(6,107)

(1,357)






Total comprehensive earnings (loss)

26,113

25,331

(24,508)

(15,032)






Net earnings (loss) per common share





Basic

$

1.11

$                    0.94

$                 (0.67)

$                 (0.50)

Diluted 

$

1.09

$                    0.94

$                 (0.67)

$                 (0.50)

 






Consolidated Statements of Cash Flows

(Unaudited)







 13-week  

13-week 

 39-week 

 39-week 


 period ended 

period ended

period ended

 period ended 


 December 26,  

December 28, 

December 26, 

 December 28,  

(thousands of Canadian dollars)

2,020

2019

2020

2019






OPERATING ACTIVITIES





Net earnings (loss)

30,722

25,849

(18,401)

(13,675)

Adjustments to reconcile net earnings (loss) to cash flows from
operating activities





Depreciation of property, plant, and equipment

4,129

5,651

13,020

17,475

Depreciation of right-of-use assets

10,183

9,980

31,728

30,002

Amortization of intangible assets

3,187

3,393

9,718

9,971

Gain on disposal of equity investment

-

(1,484)

-

(1,484)

Loss on disposal of capital assets

-

70

247

1,021

Share-based compensation 

425

359

1,031

980

Directors' compensation

74

65

222

222

Deferred income tax expense (recovery)

-

10,411

-

(3,842)

Rent concessions

(462)

-

(4,141)

-

Other

(787)

278

(899)

634

Net change in non-cash working capital balances related to operations

54,853

113,337

111,540

93,806

Interest expense

6,154

6,466

19,107

18,867

Interest income

(233)

(460)

(641)

(1,633)

Share of loss from equity investments

-

-

-

1,588

Cash flows from operating activities

108,245

173,915

162,531

153,932






INVESTING ACTIVITIES





Net purchases of property, plant, and equipment

(1,543)

1,098

(3,528)

(3,134)

Addition of intangible assets 

(2,385)

(1,879)

(6,635)

(6,804)

Change in short-term investments

-

12,750

-

79,400

Interest received

233

587

641

1,413

Cash flows from (used for) investing activities

(3,695)

12,556

(9,522)

70,875






FINANCING ACTIVITIES





Repayment of principal on lease liabilities

(7,052)

(10,137)

(25,890)

(30,752)

Interest paid

(6,154)

(6,465)

(19,107)

(18,867)

Cash flows used for financing activities

(13,206)

(16,602)

(44,997)

(49,619)






Effect of foreign currency exchange rate changes on cash and cash equivalents

559

(286)

939

(280)






Net increase in cash and cash equivalents during the period

91,903

169,583

108,951

174,908

Cash and cash equivalents, beginning of period

137,521

46,615

120,473

41,290

Cash and cash equivalents, end of period

229,424

216,198

229,424

216,198

 

Non-IFRS Financial Measures






The following table reconciles adjusted EBITDA to net earnings (loss) before income taxes, the most comparable IFRS
measure:







13-week

13-week

39-week

39-week


period ended

period ended

period ended

period ended


December 26, 

December 28, 

December 26, 

December 28, 

(millions of Canadian dollars)

2020

2019

2020

2019

Revenue

365.4

383.7

705.8

779.7

Cost of sales

(217.9)

(216.9)

(440.8)

(444.1)

Cost of operations

(69.4)

(77.8)

(154.2)

(197.4)

Selling, general and administrative expenses

(23.9)

(29.2)

(57.2)

(79.8)

Depreciation of right-of-use assets

(10.2)

(10.0)

(31.7)

(30.0)

Finance charges related to leases

(6.2)

(6.5)

(19.1)

(18.9)

Adjusted EBITDA1

37.8

43.3

2.8

9.5

Depreciation of property, plant and equipment

(4.1)

(5.7)

(13.0)

(17.5)

Amortization of intangible assets

(3.2)

(3.4)

(9.7)

(10.0)

Gain on disposal of capital assets

-

1.4

0.9

0.5

Net interest income

0.2

0.5

0.6

1.6

Share of loss from equity investments

-

-

-

(1.6)

Earnings (loss) before income taxes 

30.7

36.3

(18.4)

(17.5)

1Earnings before interest, taxes, depreciation, amortization, impairment, asset disposals, and share of loss from equity investments, and includes IFRS 16 right-of-use asset depreciation and associated finance charges. 

 

SOURCE Indigo Books & Music Inc.

Cision View original content to download multimedia: http://www.newswire.ca/en/releases/archive/February2021/04/c1103.html

Copyright CNW Group 2021

Comment On!

140
Upload limit is up to 1mb only
To post messages to your Socail Media account, you must first give authorization from the websites. Select the platform you wish to connect your account to CanadianInsider.com (via Easy Blurb).